MW
Coffee Supplier
A Business Plan for Bank Loan
In Partial Fulfillment of Requirements to
Obtain Bank Loan from Commercial Bank
of Ethiopia Yirgacheffe Branch
By: MW (Promoter)
December, 2024
Dilla, Ethiopia
Table of Contents
I. Executive Summary..............................................................................................1
II. Establishment of the Business...........................................................................1
III. The Objective of the Business...........................................................................2
IV. The Mission of the Business..............................................................................2
V. Key Success Factors of the of the Business......................................................2
VI. Organizational Structure of the Business..........................................................3
VII. SWOT Analysis.................................................................................................3
6.1. Strengths of the Business...................................................................................3
6.2. Weaknesses of the Firm.....................................................................................4
6.3. Opportunities.....................................................................................................4
6.4. Threats...............................................................................................................4
VIII. Marketing Plans.............................................................................................5
7.1. Market Analysis.................................................................................................5
7.2. Marketing Strategy............................................................................................5
7.3. Pricing Strategy.................................................................................................5
VI. Action Plan.............................................................................................................6
8.1. Purchase Schedule.............................................................................................6
8.2. Production Schedule..........................................................................................6
8.3. Estimated Production Costs...............................................................................7
8.4. Estimated Annual Operating Expenses.............................................................7
8.5. Estimated Annual Sales of Coffee.....................................................................8
IX. Project Costs and Source of Funds....................................................................8
X. Loan Repayment Schedule................................................................................9
XI. Projected Financial Statements........................................................................10
11.1. Projected Income Statements......................................................................10
11.2. Projected Balance Sheet...............................................................................11
11.3. Projected Cash Flow Statement...................................................................12
11.4. Projected Change in Equity.........................................................................13
11.5. Notes to Financial Statements......................................................................14
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I. Executive Summary
Profit is the center of doing business in any venture of investment, thus our business was
successful in past years’ performance. In addition the success of any business depends on
amount of investment capital deployed; accordingly MW coffee supplier wants working
capital finance.
MW Coffee Supplier is a new business that will operates in Gedeo Zone of Southern
Ethiopia regional state, Yirgacheffe woreda. For which promoters wants a a working
capiata. The total amount of the required capital to renovate the business is Birr
38,281,450.29 (thirty eight million two hundred eighty one thousand four hundred fifty &
twenty nine cents) only; of which, Birr 1,500,000.00 (one million five hundred thousand)
will be obtained from Mintesinot Alemu, while the rest Birr 36,2781,450.29 (thirty six
million two hundred eighty one thousand four hundred fifty & twenty nine cents) only
will be provided by Mrs Waffo Njinga. The proposed loan will be used as working
capital for purchase of coffee to be supplied to ECX and/or exporters to international
market. The rate of return on investment /ROI/ is about 40% upon net income after
payment of interest and tax.
II. Establishment of the Business
MW coffee supplier is a partnership business to established in 2017 E.C., which obtained
commercial registration certification and trade license by registered capital of Birr
5,630.000.00 (five million six hundred thirty thousand) as coffee supplier.
The business is mainly established for making profit from purchase, processing and
supply of coffee to central market via ECX and/or directly to exporters through vertical
integration. Starting from its establishment, the business has been operating in a
profitable manner.
III. The Objective of the Business
The general objective of thebusiness is to maximize the promoter’s profit,
through supply of high quality grade ‘A’ coffee to ECX and/or vertical
integration with exporters, coupled with maximizing the opportunity of an
export market created by Ethiopian Coffee and Tea Authorityand/or direct
sales through vertical integration. In this framework the business also has the
following specific objectives:
1. Exceed customer expectations without superior pricing and expanding the
existing business by supplying as per customer needs.
2. Increase the volume of production by 125%, to purchase and process
450,000 KG cherry coffee to prepare 50,000 KG sundried specialty coffee and
53550 KG washed coffee.
3. Increase sales volume in Birr by 56% from that of the base year Birr
47,000,000.00 (forty seven million)
4. Develop a business survives by its own cash flows generated from operation,
financing and investment functions.
IV. The Mission of the Business
The mission of MW Coffee supplier is providing high standard specialty coffee at higher
price at international market via marketing chain created by Ethiopian Coffee and Tea
Authority.
V. Key Success Factors of the of the Business
- The business is already ongoing in Yirgacheffe woreda Gedeo zone.
- The promoter has ken experience in preparation of wet and dry coffee as per the
standards provided by the country’s agriculture bureau.
- The promoters of the business have well known in the area as coffee and pervasive
experience in the venture. In addition, he participates in governmental and NGOs
working towards improvement of social welfare of the community in the area. Thus,
there is no risk associated with this business so far.
- Making bulk purchases so as to obtain price and quantity discount, lower
transportation and overhead costs.
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- Paying back the bank loan including interest thereon on time from the earnings
generated from this lucrative business.
- Promote family employment as other small and medium industries do; and it will play
its part on the economic development of the country.
- Further, the business will provide employment opportunities for 150 casual workers
as daily laborers.
VI. Organizational Structure of the Business
General
Manager
Finance Marketing
Accountant Store Keeper Purchaser
The general manager is the owner himself; administration and finance of the firm is the
spouse of the promoter; Ato Daniel Feleke will shoulder the marketing manager function
in the close guidance of the promoter.
In addition, the promoter’s spouse w/ro Zenebe is assigned for finance function;
however, the accountant, store keeper and purchaser positions will be filled by hiring on
contractual basis for the three months coffee processing industry has been in active
operation as of Hidar 1,2017 E.C.
VII. SWOT Analysis
6.1. Strengths of the Business
The promoter has significant experience in coffee supply business that makes perfection
doing business in the area. In addition, preparation of washed coffee as well as sundried
specialty coffee has been undertaken within the facility owned by the promoter and found
in Yirgacheffe woreda chalchale kebele. Further, the promoter owns dry coffee
processing industry in Yirgacheffe town administration.
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6.2. Weaknesses of the Firm
As any business enterprise MW Coffee supplier business has the following weaknesses.
- Shortage of working capital, as the majority of the firm’s assets were invested in
fixed assets.
- Shortage of qualified employee in the areas of quality assurance.
6.3. Opportunities
The results of external environmental analysis showed the following opportunities in the
supply chain of coffee.
- Coffee is major export item of the country, and thus greater emphasis is given to
the production processing and marketing activities by the government.
- There is ever increasing demand for Yirgacheffe organic coffee in the global
market, especially it is witnessed by United Nation’s Education, Science and
Culture Organization’s (UNESCO’s) via registration of Gedeo landscape.
- Current macroeconomic reform will initiate export based agricultural products;
since, action taken by National Bank of Ethiopia, NBE, towards amendment of
the share of foreign exchange between the government and the exporter from 70%
and 30% to 50:50 will enhance the inspire coffee exporters in the venture.
- Bulk supply of cheery coffee in Gedeo zone and surrounding woredas of west
Gujji zone
6.4. Threats
Potential threats in the external environment will be:
- Fall in the price of Ethiopian coffee in the global market due to bulk supply of
inferior quality coffee other coffee producing countries like Brazil
- Prevalence of local coffee brokers whom supply poor quality cherry coffee
coupled with their tendency to increase the price of cherry coffee without
significant analysis.
VIII. Marketing Plans
7.1. Market Analysis
The owner and his marketing and financial consultant carried out substantial research
prior to launching the expansion of the business that engaged in supply of coffee to ECX
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as well as international market chain facilitated by Ethiopian Coffee and Tea Authority.
The research results were quite compassionate.
The internal analysis revealed that the business provides its products to its customers by
installed system. On the other hand, it fails to deliver its products to its customers due to
lack of finance to avail them in bulk quantity.
When come to external market analysis, there is surplus supply of both wet and dry
coffee in woredas found in Gedeo and west Gujji zones. There are only few competitors
who purchases limited quantity.
7.2. Marketing Strategy
Basically, the business will market itself as the supplier of bulk quantity to individual
consumers by at prevailing price than its competitors. As part of this strategy, the
industry advertises by using shop notice/'tapella; words of mouth of the customers tell
their friends about the price advantage they got for quality supply.
7.3. Pricing Strategy
Differentiation pricing strategy will be used as pricing strategy of the business in that the
price of raw materials, i.e., coffee, is superior for customers supply in bulk quantity, and
ordinary price for those supply less than 100 kg per day. The venture purchases its
products in bulk quantity from individual farmers and traders in the woredas found in
Gedeo and west Guju zones.
VI. Action Plan
8.1. Purchase Schedule
For the coming year the firm planned to purchase 450,000 Kg cherry coffee as shown in
the following schedule.
MW Coffee Supplier
Projected Coffee Purchases
For the Coming Year Ended July 7, 2025
Measuremen
Item t Quantity Unit Cost Total Cost
Cherry Coffee –
Washed 300,000 75.00 22,500,000.00
Cherry Coffee – KG
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Special 150,000 75.00 11,250,000.00
Total 450,000 33,750,000.00
N.B. To be conducted in three terms @ 150,000 KG on each term.
Purchase of next term started after previousely purchased
coffee is supplied to the exporter at agreed upon selling price
8.2. Production Schedule
On the basis of the above purchase schedule, Ato Alemayehu Planned to prepare washed coffe
and sundried specialty coffee on his own premises found in Yirgacheffe woreda Aurubetela
kebele. To this end the promoter set the following production schedule for the coming coffee
harvest season.
MW Tilahun Coffee Supplier
Production Schedule
For the Coming Year Ended July 7, 2025
Input Output
Item
MeasurementCherry Coffee % Sun-dried Coffee % KG Feresula Quintal Remak
Washed Coffee KG 300000 0% 0 17.85% 53,550.00 3,150.00 893.00 Quintal @ 60 KG
Speciality Coffee KG 150,000 33% 50,000 52.0% 26,000.00 1,529.41 306.00 Quintal @ 85 KG
By-product KG 450,000 7.2% 32,400.00 1,905.88 381.00 Quintal @ 85 KG
Total 50,000 58,400.00 3,435.29 1,580.00
8.3. Estimated Production Costs
The total amount of annual cost of sales will be Birr 38,990,904.25 (thirty eight million nine
hundred ninety thousand nine hundred four & twenty five cents) only; which comprises of
coffee purchases, laborcosts, coffee drying beds and other materials, coffee packing bags etc.
MW Tilahun Coffee Supplier
Production Cost Schedule
For the Coming Year Ended July 7, 2025
No Item Measurement Quantity Unit Cost Total Cost
1 Purchases Wet Coffee KG 450,000 75.00 33,750,000.00
2 Freight In KG 450,000 1.50 675,000.00
3 Direct Labour KG 450,000 2.00 900,000.00
4 Drying &Packing Materials Pcs 1,580 400.00 632,000.00
Overhead Costs
5 Lumpsum 1,521,404.25 1.00 1,521,404.25
(Depreciation)
6 Overhead Cost (Interest) Lumpsum 1 1,400,000.00 1,400,000.00
Coffee Drying Beds Pcs 50.00 2,250.00 112,500.00
Total 38,990,904.25
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8.4. Estimated Annual Operating Expenses
The s annual operating expenses are shown in the following table.
MW Coffee Supplier
Operating Expenses Scheduel
For the Coming Year Ended July 7, 2025
Item Measuerement Quantity Unit Cost Total Cost
Slary and Benefits Months 12 7,500.00 90,000.00
Wages Expense Lumpsum 1 210,000.00 210,000.00
Transportation Expense Quintal 1,580 100.00 158,000.00
Loading & Unloading Quintal 1,580 50.00 79,000.00
Sales Commission Sales Value 7,528,235.29 0.45% 33,877.06
Coffee Hulling Machine Rental Quintal 381 200.00 76,200.00
Depreciation Expense Lumpsum 1 1,625,888.42 1,625,888.42
Municipal Service Charge Lumpsum 1,580 75.00 118,500.00
ECX Service Charge Sales Value 7,528,235.29 0.53% 39,523.24
Other Service Charges Lumpsum 1 48,750.00 48,750.00
Contribution for Development Ass.Quintals 1,580 50.00 79,000.00
Total Expenses 2,558,738.72
8.5. Estimated Annual Sales of Coffee
For the coming year the promoter planned to earn revenue amounting Birr 46,573,970 (forty
six million five hundred seventy three thousand nine hundred seventy & 59/00) as shown in
the following table.
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MW Tilahun Coffee Supplier
Estimated Annual Sales Schedule
For the Coming Year Ended July 7, 2025
Item Measurement Quantity Unit Price Total Sales
Washed Coffee Feresula 3,150.00 8,050.00 25,357,500.00
Speciality Coffee Feresula 1,529.41 8,950.00 13,688,235.29
By-product Feresula 1,905.88 3,950.00 7,528,235.29
Total - 6,585.29 46,573,970.59
IX. Project Costs and Source of Funds
The total cost required for the envisaged project will Birr 38,402,4350.29 (thirty eight
million four hundred two thousand three hundred fifty & twenty nine cents) only; of
which, Birr 36,902,350.29 (thirty three million nine hundred two thousand three hundred
fifty & twenty nine cents) only will be covered by Mrs. Waffo Njinga and the rest
1,500,000.00 (one million five hundred) only will be covered by Ato Mintesinot Alemu
as shown in following table.
MW Coffee Supplier
Financial Requirement Schedule
For the Coming Year Ended July 7, 2025
Mrs Waffo
N Item Ato Mintesinot Alemu Total
Njinga
o
Production Costs 1,500,000.00 37,469,500.00
I 35,969,500.00
II Operating Expenses 932,850.29 932,850.29
Grand Total 36,902,350.29 1,500,000.00 1500000
X. Projected Financial Statements
11. 1. Projected Income Statements
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MW Coffee Supplier
Projected Statement of Profit or Loss
For the Twelve Months Ended July 7, 2025
2025
Note
ETB
Revenue 3 46,573,970.59
Cost of Sales 4 38,585,287.67
Gross Profit 7,988,682.92
Expenses
Administrative 5 2,518,455.30
Profit Before Tax 5,470,227.62
Income Tax Expense 6 1,896,579.67
Profit for the Year 3,573,647.95
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11.2. Projected Balance Sheet
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11.3. Projected Cash Flow Statement
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11.4. Projected Change in Equity
12
11.5. Notes to Financial Statements
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